Emerging Stocks Rise as Gold Producers Rally on Fed Bets

Oct. 17 (Bloomberg) -- Emerging-market stocks rose for a
third day as gold producers followed the precious metal higher
on speculation the Federal Reserve will maintain the pace of
economic stimulus. Brazil’s real climbed to a four-month high.

Gold surged in New York and the U.S. dollar tumbled on bets
disruption from the debt-ceiling debate will hamper growth and
prompt the central bank to delay tapering stimulus. Federal
Reserve Bank of Chicago President Charles Evans said the Fed
should not begin reducing the pace of asset purchases as the
data used to gauge the economy’s health stopped during the
government shutdown. President Barack Obama signed into law the
measure to fund the American government through Jan. 15, 2014,
and extend U.S. borrowing authority until Feb. 7.

“It’s going to be stimulus, stimulus, stimulus,” Alan
Gayle, senior strategist at RidgeWorth Capital Management, said
by phone from Atlanta, said by phone. His firm oversees about
$48 billion. “It does look like the market fixation on the
government shutdown and debt ceiling is over now, and now it’s
on to the next thing. There’s a growing consensus that tapering
from the Federal Reserve is not likely to happen until March.”

Fund Outflows

The measure for stocks in developing nations has slid as
much as 16 percent since May 22, when the Fed signaled stimulus
could be trimmed if the economy showed sustained improvement.

Global investors withdrew $26 billion from emerging market
bond funds between May 29 and Sept. 18, representing about 10
percent of their total assets, according to Barclays Plc, citing
data from EPFR Global. The funds saw their first inflow in 18
weeks during the five-day period ended Sept. 25, before the
redemptions resumed over the past two weeks through Oct. 9.

Nine out of 10 groups in the MSCI Emerging Markets Index
gained, led by commodity shares. The benchmark gauge for
developing nations has slid 2 percent this year to trade at 10.7
times projected earnings, compared with the valuation of 14.2
for the MSCI World Index, data compiled by Bloomberg showed.

Brazil, Russia

Brazil’s Ibovespa snapped a six-day rally as steelmaker
Usinas Siderurgicas de Minas Gerais SA tumbled. The real gained
on speculation the central bank will raise the target rate to 10
percent next month after minutes of last week’s meeting said the
pace of increases is appropriate.

Russian stocks fell the most among emerging markets as
sliding crude oil pared appetite for shares in the world’s
biggest energy exporter and a technical indicator showed gains
this month were overdone. OAO Gazprom, the natural-gas export
monopoly, and OAO Surgutneftegas, a Russian oil producer,
tumbled more than 1.7 percent.

The FTSE/JSE Africa All Shares Index rose to the highest
level since at least 1995. The gauge advanced for a sixth day,
the longest winning streak since January 2012. AngloGold Ashanti
and DRDGold added at least 2.6 percent.